Asset Finance in 2026
A construction firm needs a new excavator to take on a contract that starts in six weeks. Buying it outright would tie up cash the business needs for materials and wages on that same job. Asset finance is the tool built for exactly that tension: it lets a business get the equipment it needs to trade and grow without paying for it in full up front. In 2026, with equipment prices still high across most sectors and working capital tight for many SMEs, asset finance has become one of the most heavily used funding routes on our desk, spanning everything from a single delivery van to a full production line. This article sets out how it works, who it suits, what it costs, and what happens when the agreement ends.
Before anything else, a word on who is writing and what this is. Capiflo, a trading name of Lenzie Consulting Ltd (company number 08174104), is a UK business finance broker, not a lender, and arranges introductions to a panel of more than 120 funders. Capiflo is not FCA authorised because it arranges unregulated commercial lending to limited companies and LLPs, not regulated consumer credit; every figure below is an indicative published band, not an offer. The numbers here are the indicative bands published at capiflo.co.uk, mid 2026.
In the episode below, Georgina talks through why the asset does most of the underwriting work on these deals.
What asset finance is
Asset finance is funding secured against the equipment, vehicle or machinery it is used to buy, rather than against the general creditworthiness of the business. Because the asset itself is the security, lenders can typically offer better terms and lower deposits than an unsecured business loan for the same amount, and they can move faster, since much of the underwriting question is answered by the asset’s value and expected life rather than a deep dive into the whole business. Indicative deposits start from 5%, terms run 12-84 months, and ticket sizes on the panel span from around £25,000 for a single piece of equipment up to £1m or more for larger fleets or production assets.
There are three main structures. Hire purchase spreads the cost of the asset over the term, with the business owning it outright once the final payment is made. A finance lease funds the use of the asset over the term without transferring ownership at the outset, and is common where a business wants the equipment on the books without the capital outlay of a purchase. An operating lease is closer to a rental: the business pays for the use of the asset over a shorter period relative to its useful life, and hands it back at the end, which suits equipment that dates quickly or that a business wants to refresh regularly.
Who asset finance suits
The asset itself does most of the underwriting, which is why asset finance so often reaches businesses a straightforward loan application would not.
Asset finance is the natural fit for manufacturing, construction, transport and healthcare SMEs that need to upgrade or expand their equipment without committing a large deposit from cash reserves. It particularly suits businesses in a growth phase, where equipment demand is running ahead of the cash the business has generated to pay for it outright, and businesses replacing ageing kit that is starting to cost more in downtime and repairs than a finance payment would cost in instalments. It is less suited to businesses whose need is genuinely for working capital rather than a specific asset, where a business loan or invoice finance is usually the better tool.
How pricing and structure are decided
The structure a business chooses shapes both the monthly cost and what happens to the asset at the end, so it is worth getting right at the outset rather than defaulting to whichever option a supplier’s finance partner offers. Hire purchase suits a business that wants to own the asset long term and is confident it will still want the same equipment in five or six years’ time, such as a core piece of production machinery. An operating lease suits equipment that depreciates fast or where technology moves quickly enough that owning outright is a liability rather than an asset, such as certain vehicle fleets or IT-heavy equipment. A finance lease sits between the two, useful where a business wants the tax and balance sheet treatment of leasing without necessarily planning to return the asset.
Deposit size is the other major lever on pricing. A larger deposit, above the 5-10% typical range, generally pulls the monthly rate down and can widen the pool of lenders willing to look at the case, particularly for businesses with a shorter trading history or a less common asset type.
Criteria in practice
Lenders on the panel generally want the financed asset located in the UK, so it can be inspected, valued and, in the event of a problem, recovered. Deposits typically sit in the 5-10% range, with the exact figure driven by the strength of the business and the type of asset. Equipment age matters too: assets under 7 years old are the easiest to finance, since the lender can be confident of a reasonable remaining useful life across the term of the agreement; older equipment is not automatically excluded, but it usually needs a shorter term or additional security to make the numbers work for a lender. And where credit history is less than clean, additional security, whether that is a personal guarantee, a charge over another asset, or a larger deposit, is often what makes an otherwise good case fundable.
Common use cases
Vehicle fleets are one of the most common uses of asset finance we see, from a handful of vans for a growing trades business through to larger commercial fleets for logistics and distribution operators. CNC machines and fabrication equipment are a close second, particularly in manufacturing and engineering, where the equipment cost is high relative to typical working capital and the asset itself has a clear, valuable second-hand market that supports lender confidence. Medical and dental equipment is the third major category, where practices need to keep clinical equipment current without disrupting cashflow, and where the specialist nature of the kit means a lender familiar with that sector, rather than a generalist, usually gives the sharper terms.
What happens at the end of the term
What happens when the agreement ends depends entirely on the structure chosen at the start. Hire purchase transfers ownership of the asset to the business once the final payment clears, so the business ends the term owning the equipment outright with nothing further to pay. Operating leases give the business the choice to return the asset at term end or negotiate an upgrade onto newer equipment, which suits businesses that want to keep their kit current rather than run it into the ground. Finance leases can often continue at a nominal, or peppercorn, rent once the primary term ends, allowing the business to keep using the asset at minimal ongoing cost without the arrangement formally ending. It is worth agreeing which route you expect to take before signing, since renegotiating the structure mid-term is harder than choosing correctly at the outset.
Financing used equipment
Used equipment is financeable on the panel, and it is a route we place regularly, but the terms depend on the valuation and the remaining useful life of the specific asset rather than a blanket rule. A five-year-old machine with a strong resale market and years of productive life left will get a materially better offer than a similar-age asset in a niche category with few buyers if the lender ever had to recover and sell it. Getting an early valuation, or at least a realistic view of the asset’s expected remaining life, is the single most useful thing a business can do before applying for finance on a used purchase.
2026 outlook
Equipment costs have stayed high through 2026 across most of the sectors we serve, which has kept demand for asset finance strong, particularly among manufacturing and construction businesses trying to avoid tying up cash in outright purchases. Lenders on the panel remain active and competitive in this space, since the security of the underlying asset makes it one of the better-understood risk categories in commercial lending. For businesses planning equipment purchases over the next 12 months, the practical lesson is to bring the finance conversation forward, before the purchase decision is finalised, rather than after, since the structure chosen can materially change both the monthly cost and the tax treatment.
For context, the Bank of England base rate has held at 3.75% since the December 2025 cut, part of why deposits from 5% remain achievable across most lenders on Capiflo’s panel in 2026.
FAQ
What deposit will I need? Deposits on the panel start from 5%, with most cases sitting in the 5-10% range depending on the strength of the business, the asset type and its age. A larger deposit generally improves the rate and widens the choice of lenders willing to look at the case.
Can I finance used equipment? Yes, used equipment is regularly financed, but the terms depend on the valuation and the remaining useful life of that specific asset rather than a fixed rule. Equipment under 7 years old is generally the easiest to place, though older assets can still be financed with the right security or structure.
What is the difference between hire purchase and a finance lease? Hire purchase spreads the cost of the asset with ownership transferring to the business at the end of the term. A finance lease funds the use of the asset without transferring ownership at the outset, though it can often continue at a nominal rent once the term ends. Which suits your business depends on whether you want to own the asset outright or prefer the tax and balance sheet treatment of leasing.
What sectors do you place asset finance for most? We see the heaviest demand from manufacturing, construction, transport and healthcare businesses, financing everything from vehicle fleets and CNC machinery through to medical and dental equipment. That said, asset finance is available for most equipment and vehicle purchases across sectors, and it is always worth asking rather than assuming your sector is not covered.
Talk to us
If your business needs to upgrade equipment, vehicles or machinery without draining working capital, that is exactly what asset finance is built for. Talk to a business finance broker about the asset, the deposit you can put down, and the structure that fits how long you plan to keep it.
All figures in this article are indicative published bands for UK asset finance in 2026, not an offer, a quote or a financial promotion, and any facility is subject to lender terms and full underwriting. This article was written by Matt Lenzie.